Under Armour New Product Analysis:The Introduction of Snowboarding Boots & Helmets

Report Created By:

Grafton Elliot

Nicole Liebman

Owen Coale

Selim Demirkan

Executive Summary

The report is an analysis on Under Armour’s position in the marketplace and their

growing trend to expand their product lines. Due to major sporting events such as the 2014

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Sochi Olympics there is a growing trend it the action sports industry. Companies such as Nike

have entered the snowboarding industry in hopes of receiving a high growth potential. In order

to remain competitive and appeal to this emerging market, Under Armour must develop products

to penetrate the snowboarding industry.

Under Armour’s development of innovative technologies is what separates them from

others in the sporting apparel industry. By developing innovative technologies Under Armour

will be able to develop product that will succeed in this new market. Using the trademarked

ColdGear technology Under Armour will design helmets and boards to be implemented in the

snowboarding market. Nike currently introduced snowboarding boots to gain a favorable

position in this new market. Following in the footsteps of their highest competition our company

will be able to continue to compete with the highest levels of competition.

Our new products will provide customers with a warm, reliable, and trustworthy product

that customers have come to expect from Under Armour. In order to gain customer interest, our

marketing team will use popular sporting events such as the 2014 Sochi Olympics and Winter X

games to market are new product lines. Sporting events such as the Winter X games are non-

affiliate organizations that will allow Under Armour to gain great marketing potential.

Table of Contents

Company Background ……………………………………………………………………….4

Issues Under Armour Faces…………………………………………………………………5

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Industry Analysis…………………………………………………………………………….6-7

Competitive Environment……………………………………………………………………7

Issues Facing Under Armour’s Competitors………………………………………..8

Under Armour SWOTT Analysis……………………………………………………………8-

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Research Methodology……………………………………………………………………...10-12

Analysis of Interview…………...………………………………………………………...12-14

Recommended Strategies and Tactics………………………………………………………14-

15

Appendices

References

Company Background

Under Armour was founded in 1995 by Kevin Plank who played on the University of

Maryland’s football team. Plank wanted to create a shirt for his teammates that would not be

soaked in sweat after every single practice and game. Plank researched different fabrics to

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minimize this problem, which led to the revolutionary t-shirt built from microfibers that absorb

moisture to keep athlete cool and sweat free. Plank’s company that started in his grandmother’s

basements shortly became one of the most successful sports line in the world. “ Under Armour

makes the world’s most innovative performance footwear, apparel, and accessories and is a

mainstay on the athletic fields, courts, pitches, gyms, and rinks everywhere (Under Armour

Performance Sports Company History, 2012)”. Under Armour is a constantly producing

innovative product lines to change the sports world. There most famous compression t-shirt helps

boosts muscle performance and minimize sweat while keeping the athletes cool and dry.

As of today, Under Armour’s growth as a company is expanding rapidly. The company

currently sponsors the NFL with their collection of apparel and innovative shirts. Under Armour

has opened several stores and factory outlets all over the United State and Canada. Under

Armour even opened their first store outside of the United State which is the Scottland store.

This company identifies current trends within the sporting market and is able to keep up with the

demand for their products. Under Armour is a young company with a lot of financial and market

growth in their future. (Under Armour Peformance Sports Company History, 2012)

Issues Under Armour Faces

In a free market there are a number of factors that can pose as an issue facing a company

such as declining sales, changing economic conditions, changing political or environmental

landscape, and negative publicity to name a few.

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With the Olympics being seen across the entire world, all sorts of sports vendors are in

competition to represent their home country and if possible other nations as well. Needless to

say, negative publicity about the performance of one of the sports product by an athlete could

have minimal or detrimental effects on a company’s image. A prime example of this was

portrayed in the speed skating events for American’s wearing Under Armour suits. Shani Davis,

a highly anticipated U.S. speed skater, was one of a few U.S. Olympic speed skaters that blamed

the new Under Armour uniforms for the poor performance by the athletes (Horovitz, 2014).

Negative repercussions of this statement has yet to really show any effect in the market with

Under Armour, but for such a negative comment as that to have been made on a global level

could really affect the image and credibility of the product.

What could be an enormous opportunity for growth for Under Armour could also pose as

an issue for the image of the brand. It is apparent that men’s products more so dominate the

market than do women’s products in the sporting industry. Under Armour wants to be known for

having a broader product line for women than just things that are tight fitting and bright pink so

they are creating a marketing campaign to show women new products they have to offer that are

not stereotypical. The company also has to work on distribution which is another large hurdle

because if they want a larger female customer base than they need to have their items in

locations other than male dominated athletic stores (Townsend, 2013).

Industry Analysis

While examining the snowboarding industry for any particular trends, there are a few that

have a noticeable correlation to snowboarding, and winter sports in general. The first and most

impactful trend being the winter Olympics, another trend being stricter border regulation

between the U.S. and Canada, and the third trend being the overall decline in the U.S. economy.

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Every four years there is a noticeable increase in winter sports participation. For 2009 the

amount of winter sports participants was 7.4 million (SIA, 2013), then for the 2010/2011 year

following Vancouver winter Olympics in early 2010 that number grew to almost 8.2 million

(SIA, 2013). Then for the next three years those numbers slowly tapered. The winter Olympics

greatly increases overall interest in winter sports, and particularly snowboarding in the U.S.

because of their dominance in the sport with the likes of icons such as Shaun White. Because of

the 2014 winter Olympics in Sochi, right now is the ideal time to profit off of winter sports.

Canada is home to numerous quality snowboarding locations and millions of

snowboarders, so Canada will be a large targeted market for our product. Unfortunately new

regulations have only further separated the U.S. and Canada. It is now required for anyone

traveling between the two countries to have a passport (Homeland, Security, 2014) making it

more difficult to travel north for a quick snowboarding trip. Canada is an appealing market, and

their steadily increasing interest in the NFL creates an interesting possibility for our brand when

marketing to them.

The overall decline the U.S. economy can negatively affect Under Armour’s success in

the industry. Fewer people are taking vacations and planning snowboarding trips. However while

there are slightly fewer snowboarding participants this past year, when compared to 2009 (the

year just before the Vancouver winter Olympics), sales for snowboarding equipment and apparel

have decreased less, so people are still buying the products.

Competitive Environment

Burton:

· Currently the leading Brand in the Industry.

· Sets the trends for new styles and designs.

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· Well designed website and online presence geared towards snowboarders and winter

sports enthusiasts specifically (Burton.com, 2014).

Nike:

· The largest sports apparel company in the world with the most resources at their

disposal.

· Operates on a global scale.

· A very well designed website that is easy to navigate; however Snowboarding is only a

small portion (Nike, Inc., 2014).

Smith:

· A well-established brand in the industry.

· Specializes on helmets and is well trusted.

· Offers a wide range of products including low, mid, and high price points.

· A well designed website but a minimal online presence (Smithoptics.com, 2014).

Issue Facing Under Armour Competitors

Under Armours closest competitors include Nike, Columbia Sportswear, and Adidas.

These prestigious companies are driving the sports apparel market. Nike, being the industry

leader, is currently facing problems keeping their products up to date and relevant to the market.

Constant growth has pushed Nike into new product lines such as Snowboarding and Skiing.

These product line extensions require increased labor and research methods.

Outsourcing the production of Nikes products have caused excess inventory issues in

China. The low demand and excess supply has caused Nike to slow production on products.

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According to Trefis.com this hindrance has caused Nike to “lower its inventory, enhancing its

marketing activities, creating a differentiated product portfolio, and improving the productivity

of its store base” (2013, Trefis Team).

Other concerns of Nike include the vast growth of Under Armour. Under Armour’s

niche marketing has enabled them to dominate the sports apparel market in recent years. This

domination has caused Nike to expand its marketing efforts to regain their once dominant market

position. According to Stuart Elliott of the New York Times, Nike has increased its marketing

budget by 20 percent compared to the previous fiscal year. This marketing jump will hopefully

enable Nike to resolve its lowering demand issue.

SWOTT Analysis

Strengths:

- Innovative brand with many product lines

- Strong brand awareness

- Loyal Customers

- Celebrity Endorsements

- Strong marketing team

- Quality products

Weaknesses:

- Has yet to establish products regarding snow recreation

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-Tends to focus on the apparel of sporting activities rather than equipment

- There have been no safety devices produced by Under Armour

Opportunities

-With the winter Olympics currently happening interest in winter sports should increase

-Tom Brady is one of our celebrity endorsers an New England is a big market for winter sports

- No Under Armour Product is in the snowboarding niche market

Threats

-Nikes domination of the market

-Research costs of developing unfamiliar products

-Burton’s large presence in snowboarding market

Trends

- Most teams in NFL wear Under Armour shirts

- Cooling shirts

- Used by all athletes

Research Methodology

Under Armour’s extremely fast rise to the top of the sporting apparel industry was no

accident. Combining the most innovative and revolutionary products to fit the needs of all age

groups, they have been able to have success in almost every target market. Whether you are a

child going to your first football practice or going on a hiking trip to celebrate your retirement,

Under Armour can fit your apparel needs.

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Under Armour’s new boots and helmets will expand this ever changing target market.

Incorporating segmentation methods such as Demographics, Social/Cultural/Lifestyle,

Geographic and Psychographics our team will be able to develop the perfect target market.

1. Demographics

· Age- Under Armour will target users from the ages of 12 to 44 which would be a segment

with much more brand recognition of Under Armour than the older generations. In most case

when children/ adults are learning how to snowboard they will rent equipment from the resort.

Once the consumer has become more experienced they will then purchase equipment, including

boots and helmets.

● Sex- Both male and female. We will be able to market are boots to both men and women

the same way. We can market our Over Armour helmets by using gender specific

marketing:

Male/ Female- Boots- Under Armour’s newest ColdGear technology “Infrared” will keep your

feet warm in the coldest of mountain conditions.

Male- Over Armour Helmet- Use a professional snowboarder fresh of the Olympics to advertise

new helmet.

Female- Use snowboarder Sarka Pancochova, a women’s snowboarder that recently seriously

cracked her helmet in the Sochi 2014 Olympics (Branch, 2014).

● Occupation- Under Armour’s target market will be anyone that is familiar with the

snowboarding industry. With snowboarding gear being a high involvement good, we

hope to target parents and grandparents that are looking for the perfect gift. College

students that have a decent among of free time with also be targeted.

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● Income- The sport of snowboarding, along with lacrosse and hockey is one the most

expensive sports. This will cause are marketing efforts to be directed to middle, upper-

middle, and upper class citizens. With income levels ranging from 65 to 100 thousand

dollars a year these citizens will be able to allocate the capital to purchase our products

for a gift.

● Ethnicity- Under Armour products target all ethnicities. Barriers such as language will

not affect the purchase of this universal product.

● Education- Under Armour does not target a specific educational background. While

certain educations could influence the income levels of customers, if you have the money

to purchase the product there will be no questions asked.

2. Social/ Cultural/ Lifestyle

Under Armour Boots and Helmets will be able to fit the needs of an extremely diverse

and highly motivated group of customers. Snowboarding has been on a constant uphill rise in

the recent years and this has no sign of slowing down. The typical customers of this industry are

young, adventurous, healthy individuals that understand how to work hard and play harder. The

customers of this industry are also very rarely brand faithful. Looking for the best technologies

and prices regardless the brand, this market is perfect for new market entries.

3. Geographic

Under Armour’s geographic segmentation is worldwide. The company holds six

headquarters, with locations in the US, China, Indonesia, and Canada (UnderArmour.com). This

headquarter separation allows Under Armour to sell their products to customers all around the

world. The entry of our new product line extension with first be sold in the United States to “test

the waters”, but if success continues the product will be sold globally in the future.

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4. Psychographics

Psychographics is the study of personality, attitudes, interests, and lifestyle. Under

Armour’s target market contains a fairly specialized psychographic segment. While there is an

occasional mom or dad that wants to try snowboarding, most of the target market will be

adventurous young adults.

Analysis of the interviews

We performed a telephone interview where we would administer our survey that would

take nearly fifteen minutes per person. After calling 300 people, there was a 50% incidence rate

lowering our potential respondents to 150, then there was a 33% refusal rate narrowing our list of

respondents to 100 qualified and willing people. Once we had finished administering our survey

to the respondents, we had a lot of raw data that we interpreted with graphs, tables, and charts.

In our line graph titled “Who Would Buy?”comparing likelihood to purchase Under

Armour, and the frequency of snowboarding/skiing, there showed to be a steady negative

relationship which meant that people who were more avid snowboarders/skiers were less likely

to purchase the new UA snow equipment. Finding that negative relationship helped us realize

that marketing to less avid snow recreation enthusiasts would be much more affective.

Our bar chart titled “Mean Scores for Product Ratings,” showed the mean scores for

products ratings such as quality, price rating, aesthetics and other product traits demonstrated to

us that quality was the highest rated category by consumers for UA products. Being perceived to

have high quality by the respondents was great, but it also showed areas where we could use

some work such as safety and comfort. UA does not really have a safety focused product so we

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anticipate that creating the helmets and boots that will enhance safety on the slopes will also

boost our safety ratings.

We constructed a pie chart titled “Sample Variance” that showed the variations amongst

the ratings respondents gave each product trait. Price Rating had the largest variance illustrating

that there were a lot of mixed results for how people perceived UA’s pricing for their products.

We thought this might happen anyway because of how snow equipment can be pricey and some

of these respondents showed to be more price sensitive than others who might be more avid

snowboarding/skiers who do not paying a little more. The other traits had smaller variations

which means that the other traits were areas where respondents for the most part agreed on.

A pivot tabled we constructed titled “Race and Likelihood” was able to shed some light

on who would be most willing to purchase our UA snowboard boots and helmets. We were able

to conclude that people of Asian descent are least likely to purchase our newly developed

products while Hispanics are most likely to purchase our products. What is positive for our

results is that most respondents answered “4” for likelihood indicating a strong interest in

purchasing our developing UA snow equipment.

Also we used a correlation table that helped us determine if there were any relationships

amongst the variables worth looking into. Though there were not any strong correlations of .8 or

above, there was a positive and moderate relationship between Apparel Brand and Likelihood to

purchase. We were able to determine that most people preferred Smith products from that

correlation. City and the item purchased also had an impact on each other where people in Aspen

preferred Burton products. The strongest correlation was between Apparel Brand purchased and

Type of Apparel Purchased where most people buying strictly helmets prefer to go with a Smith

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product. Also most men buying boots tend to lean in the direction of a Burton product. What

looks great for UA is that Women, who make up over 30% of the market, favored the idea of

buying boots from UA.

Through the use of these tables, charts, and graphs, we were able to turn our raw data

from the survey into understandable and helpful numbers that were able to help up further

narrow our target market and our potential in the market.

Recommended Strategy and Tactics

Due to Under Armours strong position within sports market, it makes sense for Under

Armour to launch these products for their consumers. Under Armour’s products are trusted by

consumers worldwide. By effectively introducing these products to the market, it will give Under

Armour a chance to gain market share from markets that the company is not yet established in.

The launch of snowboard boots and helmets will reach consumers that Under Armour was not

able to reach before. Although Under Armour already has an established name within the

sporting industry, it does not have any share in the snowboarding niche market. Consumers, who

trust the brand, will be more prone to buy this product when it hits the market. There are low

entry-barriers in the snowboarding market that it will be easy for Under Armour to gain market

share from their competitors. Due to Under Armours strong brand name recognition and loyal

consumers, it will be easy to acquire new customers who are interested in buying snow boots or

helmets.

The target market for this product is spilt up into two different groups. The groups consist

of ages 12-24 and then ages 25-40. Ultimately, the common consumer who is interested in

purchasing an Under Armour item is someone who enjoys sports. Consumers who regularly

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purchase Under Armour will trust the brand and new product that is coming out. Under Armour

can reach these consumers via commercials, billboards, in-store promotions and through

magazines. A commercial can be ran on TV channels that are mostly watched by consumers who

are interested in sports.

All in all, snowboarding boots and helmets will be a great product line for Under Armour

to introduce. By introducing these products, it will help Under Armour expand their product lines

and gain more consumers’ attention. Under Armour will also develop stronger brand recognition

by entering this market.

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Apendices:

References:

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